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Knight Frank forecasts Kuala Lumpur to see 2.5% growth in prime office rental over next three years

12 October 2017

11 October 2017, Kuala Lumpur – Knight Frank, the independent global property consultancy, launches the fourth edition of Global Cities: The 2018 Report.  The report looks into the continuous trends in real estate across 40 Global Cities, equipping occupiers and investors with insights for future real estate decisions.  As part of the report, Knight Frank ran three-year forecasts for 15 prime office markets in Asia Pacific.

Highlights of the forecasts:
·         13 of the 15 markets are expected to see rental growth over the three years (from the end of 2017), with only two markets expected to see rents soften over the period.
·         Manila is forecast to see the strongest growth in prime office rents in Asia Pacific region, with nearly 20% over the next three years. Strong occupier demand from the offshoring and outsourcing market is expected to be the key factor in pushing rental levels upwards.
·         Brisbane which in 2017 has seen some rental growth return to the market following four years of rental contraction is forecast to see the second highest rental growth.
·         Similarly, Singapore a market that has seen office rentals softening since Q2 2015 is also expected to turn the corner as demand starts to exceed supply.
·         Hong Kong is forecast to continue to see robust rental growth on the back of an anticipated continuation of the influx of Chinese mainland tenants.
·         Beijing and Shanghai, despite healthy demand are forecast to see some rental softening as the huge pipelines of supply in both cities come to the market.
·         Kuala Lumpur, ahead of the two Chinese cities, is expected to grow by 2.5% over the next three years, coming off from the 1.7% annual decline (Q2 2016 – Q2 2017).
Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia, comments, “Greater Kuala Lumpur is one of the key market leaders in mixed-use development. These self-contained developments, which promote the ‘live, work, play’ factor, integrate the retail, office and residential components and are well supported by good transport infrastructure such as the MRT, LRT and BRT Successful mixed-use developments include Mid Valley City, Bangsar South and Sunway Resort City. Damansara City which is seeing the rejuvenation of its former town centre into Pavilion Damansara Heights will be the new address to watch.”
Datuk Zainal Amanshah, Chief Executive Officer at InvestKL, states, “Greater KL and Malaysia has much to offer in comparison to other Southeast Asian cities. We’ve seen a steady influx of MNCs into KL in recent years, operating as a regional hub. This is because the ease of doing business is strong in Kuala Lumpur where Malaysia is ranked second in ASEAN according to World Bank’s Doing Business Report 2017, and we see a few factors such as the MRT launch being the drivers of growth to spur foreign direct investment in Greater KL.
“With the increase of supply, we see the quality of offices continuing to be upgraded to cater to the requirements of large corporates and multinational companies. For instance, Greater Kuala Lumpur offers a great mix of liveability and lifestyle options, making it a perfect location for young talent to live, work and play.”
Judy Ong, Director of Research & Consultancy, Knight Frank Malaysia, says “Kuala Lumpur, with its value proposition supported by improving pool of premium and good grade office space and transport infrastructure, a multi-lingual educated workforce and competitive cost of doing business amongst others, continues to attract MNCs to set up their regional business hub here, evident by the success stories of InvestKL. The capital city, which will have a new financial district in Tun Razak Exchange (TRX), offers opportunities that parallel other western and regional markets. There is a pool of good tenants, and offices in Kuala Lumpur offering great and flexible covenants.”
Teh Young Khean, Executive Director, Corporate Services, Knight Frank Malaysia, highlights, “The lacklustre office market continues to see flight to quality as MNCs and local corporations take advantage of the availability of better grade office space at competitive rentals and attractive tenancy terms. At the same time, with changes in technology supporting flexible working culture, the serviced office segment is gaining popularity. With strong government-led initiatives by MDec, leading to the launch of Malaysia Digital Hub and the Malaysia Tech Entrepreneur Programme (MTEP), demand for co-working spaces is expected to grow across a diverse mix of industries and professions such as technology start-ups and SMEs. Greater Klang Valley continues to see the expansion of global as well as the emergence of local co-working operators. To date, these flexible co-working spaces collectively account for approximately 500,000 sq ft of occupied space – which is about 0.5% of total office stock.”
Elsewhere in Asia Pacific, Nicholas Holt, Asia Pacific Head of Research, Knight Frank, says, “Rental growth prospects across the major cities in Asia Pacific look positive over the next three years, reflecting solid regional growth prospects translating into strong demand from a number of sectors. Occupiers in technology, media and telecommunications are especially likely to drive demand in many of the gateway cities – while we also expect to see more Chinese tenants active in the major markets.
“Beijing and Shanghai, the two largest office markets in the Chinese mainland, are likely to see rents soften over the next three years given the significant supply pipelines, offering more options to occupiers looking to renew or relocate.”
Prime Rents Forecast: 2017 (year-end) to 2020 (year-end)
Forecast: 2017 year-end to 2020 year-end
(% growth)
Hong Kong
New Delhi
Kuala Lumpur
Source: Knight Frank, Sumitomo Mitsui Trust Research Institute
To download the report, please click:
Follow @KnightFrank #KFGlobalCities
For further information, please contact:
Nicholas Holt, Asia Pacific Head of Research 10 6113 8030 @nholtKF
Rachel Loke, Asia Pacific Head of Marketing, Communications & Digital 6429 3587 @knightfrank
Ms Seline Soo, Marketing & Communications Manager, Knight Frank Malaysia +603 2289 9669 @KnightFrank_my
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit
Knight Frank has a strong presence in Malaysia with its headquarters in Kuala Lumpur as well as branches in Penang, Johor and Kota Kinabalu. The company offers high-quality professional advice and solutions across a comprehensive portfolio of property services and is registered with the Board of Valuers, Appraisers and Estate Agents. The Company is licensed to undertake property, valuations / consultancy, estate agency and property management and is also on the panel of all leading banks and financial institutions. For further information about the Company, please visit